Context is everything, says John Howard

The former prime minister shares his thoughts on today’s global and domestic issues in an edited transcript from his speech at the Westpac Deeper Insights Forum.

Updated Aug 28, 2012 — 8.40am, first published at 12.06am

One of the reasons why Australia has been taken more notice of in our part of the world in the last 20 years is our economic strength compared to what it had been 40 years ago. I find it hard to believe that the weaker states in the euro zone won’t, at sometime or another in the not too distant future, begin to leave it or are required to exit it.

I’m not overly optimistic about the future of the euro. I’m not quite as pessimistic about the international consequences, if the exit of individual countries from the euro were to be properly managed.

When the history of Europe in this period will be written, one of the very important chapters will be on how the political elites conned many of the governments of smaller countries into joining something in the hope that it would obviate the need for those countries taking difficult political decisions.

John Howard reinforced the value of connections and context to managing and understanding today’s global and domestic challenges. Photo: Glenn Hunt

If I go across the Atlantic to the United States, I agree that the presidential election will be much closer than many people predicted a few months ago.

I go to America a great deal. The strongest message I get is there is an overwhelming sense of disappointment in Barack Obama . There is an almost universal disdain for him within the American corporate community and that will be reflected, because of the different funding rules that operate in that country, with an overwhelming financial advantage to the Republican campaign.

Advertisement

The extraordinary decision of the American Supreme Court that said that you give an unlimited amount to a so-called “super-PAC", provided it wasn’t formally affiliated with either side of politics, whatever that means, but you are restricted in what you could give to an individual party, means the Republicans will get an enormous financial advantage.

On top of that, Mitt Romney ’s connections with corporate America are very strong.

And on top of that, some of the assistance that came to Barack Obama from Wall Street in the last campaign will be missed.

America has, of course, voluntary voting – 62 per cent of Americans voted in the last presidential election. I would have thought the “Yes we can" euphoria will not be there on this occasion and it is quite possible that [of those who] voted in record numbers for Barack Obama, not all of them will come out on this occasion and vote for him again.

I think the choice of Paul Ryan [Mitt Romney’s running mate] is interesting. There are many things about Romney that appeal to me [but] I don’t find him a convincing “rhetorician". I sometimes find myself watching on television and going “say this", and he doesn’t.

On the other hand, one great asset he’s got is that he is recognised as having been a huge success in business. And that is something most Americans unselfconsciously admire.

That now brings us to our part of the world.

I do want to say something about this current debate, which I think is rather juvenile, about the so-called choice that Australia must make between China and the US. The worst thing in the world for this country would be to imagine at some point [that] we have got to make a choice between the United States and China.

Advertisement

My own experience in the time I was prime minister was that the Chinese understood very clearly the historic context of our close association with the US. They respected the fact that a country like Australia had maintained a loyalty towards that relationship.

And if we can in our dealings with the Chinese focus on the things that we have in common, and accept there are many things about China that we will never understand and never like, and not pretend that we can have the sort of relationship with China as we have with countries like the United States, then there is no reason why we cannot continue to engage with both countries and play our own role in keeping the temperature down.

I’m very much in favour of having Chinese investment – just as much as I was in favour of having Japanese investment. Japanese companies of the 1970s and 80s weren’t state- owned but they were certainly “state-told" on many occasions. I was the treasurer for some period of that time and administered our foreign investment policy. Whilst many Japanese corporations may not have been state-owned, they were certainly told what to do by the Japanese government.

I think we have to take a bit of rough with the smooth when it comes to foreign investment from China, just as we did from Japan and the US.

I don’t think we should get over-excited about the level of Chinese investment in this country. You’ve got to remember when a company invests, whether it’s state-owned, partly state-controlled or not, it still has to comply with the laws of Australia and it’s quite possible for the treasurer of the day to impose conditions on the investment.

So on China, let me simply say, by all means contest the decision-making processes of that country where it affects our interests but let us not engage in this rather juvenile game of who we choose, because we may create a situation that is not in our interest. There is no reason why for many years into the future, we can’t continue to have a very close relation, albeit of a different kind, with most of those remarkable countries.

Can I just say one thing about the domestic political and economic scene. I think the Australian people understand that right at the moment it’s very difficult to have certainty, because we don’t have – as a consequence of the last election – a clear-cut government.

I don’t mean that in any sense of personal unkindness to the current Prime Minister or current government.

Advertisement

But in politics, authority is different to popularity. Every prime minister at various stages in his or her career is unpopular. I remember very vividly a period of great unpopularity when I was prime minister.

I remember the same in relation to my predecessor, and some of his predecessors. That’s not the issue, the issue is authority.

It’s very difficult to have authority when you involve yourself in the removal of your popularly elected predecessor and then fail to win an election in your own right at the election that occurred two months later –it’s very difficult to have authority.

I don’t think we will have certainty while we have a minority government, and that would apply whether the minority government were led by a Liberal or Labor person. This is the first time since 1940 we have had this situation and until an election is held and there is a clear-cut result, there will be a sense of drift and lack of authority.

But I do end on a note of optimism. The Australian people worked out a long time ago the health of the Australian economy was due in part to the quality of domestic economic management, but also due to the strength of our overseas economic connections.

I thought that the public reaction to the mining industry’s campaign against the first iteration of the mining tax was a good illustration of how the Australian population has worked out the value of the mining industry to this country.

When I was a very young person, quite a few years ago now, there was a feeling that when you talked about Japan or you talked about China, you thought in terms of poor products, of cheap labour and the like. The young of today don’t think that way at all. The young of today understand how important countries like Japan and China are to us.

And when they thought that there was going to be a new tax system that would hurt an industry which had been so very important to Australia’s survival, not only they but many other people thought that was a thoroughly bad idea.

So the optimistic note that I end on is that I think the Australian population is fairly savvy about the importance of our linkages with our own region, the great significance of the mining industry, and indeed any industry that makes a contribution to the generation of wealth and that would have been the source of continuing reassurance and continuing comfort to us all – and it is a reminder, once again, that context is everything.